US equity indexes
Between December 27 and January 3, US equity indexes had the following correlations with US crude oil February futures:
These three equity indexes have exposure of ~5.1%, ~5.2%, and ~5.9% to the energy sector, respectively. The equity indexes fell 1%, 2%, and 1.6%, respectively, in the trailing week. US crude oil February futures rose 5.6% during this period.
Oil’s rise and equity indexes
The correlations indicate a mild inverse relationship between oil and most of these US equity indexes. In fact, these equity indexes and oil returns moved inversely in the trailing week as shown in the graph above.
Between December 27 and January 3, the Energy Select Sector SPDR ETF (XLE) rose 0.7%, the only rise among the SPDR ETFs that break the broad market into subsectors. The rise in oil might have helped XLE’s rise despite broader market weakness, which we discussed in the previous part. During this period, the Technology Select Sector SPDR ETF (XLK) fell 4.3% and is the underperformer on our list.
Except XLE, the rest of the SPDR ETFs on our list ended in the red in the seven calendar days to January 3.
Next, we’ll discuss the important price level for US crude oil next week.